During its Annual General Meeting, Tony Elumelu, chairman of UBA, encouraged shareholders to reinvest their dividends in the bank’s forthcoming rights issue. Elumelu pledged to reinvest 100% of his dividends from FY 2023 and advised shareholders to follow suit, emphasizing the opportunity to maximize returns on their investments.
Addressing over 277,000 shareholders, Elumelu stressed the importance of reinvestment, stating, “If we don’t do so, we would be leaving food on the table for others who did not labour for it.”
For FY 2023, UBA disbursed a final dividend of N78.7 billion, equivalent to N2.3 per ordinary share, to its shareholders. Elumelu, the largest individual shareholder with approximately 2.54 billion shares, stands to receive around N5.85 billion in dividends from the bank.
During the AGM held on May 24, 2024, shareholders approved the proposed rights issue, allowing the bank to issue 10,800,578,634 new shares, thereby increasing its share capital from N17.1 billion to N22.5 billion.
UBA Plans Staged Rights Issues
Elumelu disclosed plans to conduct the rights issue in multiple stages, synchronized with dividend payments, to facilitate reinvestment by existing shareholders. He outlined, “We’ll have the first one soon, the second one [maybe] after we do a half-year interim audit, and another next year after another General Meeting.”
While specific rights issue terms remain undisclosed, the offer price is expected to be around N15 per share, given UBA shares’ trading price of approximately N19 as of May 24, 2024. If fully issued at this price, the bank will raise N162 billion.
However, UBA aims to raise to N384.2 billion to meet the N500 billion minimum capital requirement for an international banking license. Elumelu expressed confidence in the bank’s recapitalization strategy, which includes a rights issue followed by a private placement and potentially a public offering.
Despite potential challenges, Elumelu remains optimistic about UBA’s ability to meet its capital requirements and drive growth. He stated, “Recapitalization is not an issue at all,” outlining the three-stage strategy to bolster the bank’s financial position.
